Manage your vacation budget like a pro with these expert tips

BAKERSFIELD, Calif. (KERO) — Inflation has affected every aspect of our lives, from shopping to Christmas presents. 23ABC spoke with a local financial expert about things to avoid while heading out on the holiday hunt.

While it can be tempting to pull out your credit card, Dave Anderson of Moneywise Wealth Management recommends caution with this approach. Data from LendingTree shows that credit card balances have risen more than 15% since this time last year, the biggest jump in two decades.

Anderson says that not only will items be more expensive due to inflation, but the interest you’ll incur on those purchases will also be higher.

“Because we’ve been in this interest rate environment, since the early 2000s, when rates have been falling and now they’re going up. And it can surprise people,” Anderson said. “So the credit card you might have had last year, remember that the interest rate is adjustable. So as interest rates go up, you’ll see the rates on that credit card go up, which will cost you more.”

Anderson also says shoppers should keep a budget in mind before heading out, as retailers set up their displays to encourage impulse purchases.

“They spend the whole year planning how to get you to spend more money in that store. You have to go knowing what you are going to spend ahead of time. If you go in there with no budget, you don’t really know how much you’re going to spend, it’s very likely that you’ll walk out of that store, having spent more than you wanted to, so have a plan, have a budget and stick to it and its rate. of success will increase,” Anderson said.

See also  A packed agenda for Skift Global Forum East in December

Anderson also says that store credit cards and financing programs will cost you more than using a credit card.

Plus, while shoppers may be tempted to overspend now that spring tax refunds are coming up, that strategy could get you in trouble down the road.

“If you depend on that refund, well, what happens when something happens in the meantime that requires a little more money? So it really sets you back,” Anderson said. “And you also have to remember that having debt is stressful. For example, it reaches your emotions and your quality of life is affected by it. So the better you handle it, that will bring you a lot more happiness than getting a few extra gifts for Christmas.”

Here’s how to get the most for your money when it comes to shopping:

Before you head out, NerdWallet recommends setting up specific budget categories for the holidays, such as gifts, travel, food and entertainment, decor and clothing, and charitable donations and tips.

Then set price limits per gift and stick to them.

And consider a homemade gift for a few people on your list, like a grandparent or a child’s teacher.

If you’re done shopping but feeling pressure to spend too much, NerdWallet says it’s never too early to start planning next year’s vacation.

Experts recommend establishing a “sinking fund,” which is a savings account that you contribute to over a planned period of time to reach a financial goal. It is not an “emergency fund.” It is dedicated solely to a specific category, such as vacations.

Also, consider putting your holiday savings into a high-yield savings account. The account will save you the temptation to spend that money because those funds will earn interest over time.

See also  The royal family will not open official condolence books at Windsor Castle or Buckingham Palace

Leave a Comment